Abstract

World demand to rise 3.4% per annum through 2016

Global refractory demand is projected to grow at a 3.4 percent annual rate
through 2016 to 46.3 million metric tons, an improvement over the 2006-2011
period. Product sales will climb 5.3 percent per year in value terms to $46.5
billion in 2016, not as strong as gains registered in recent years because of
a moderation in raw material costs and refractory prices.

There are three main factors that impact the world refractory market total:
output levels in major end use markets, the manufacturing methods used in
these industries, and the nature of the refractory products utilized.
Increases in refractory demand through 2016 will be stimulated by an
acceleration in construction and other fixed investment activity as economic
conditions continue to improve, leading to stepped up output of steel,
aluminum, cement, and other goods made using refractories. A pickup in
personal consumption expenditures will also result in higher demand for
everything from glass containers to motor vehicles, contributing to growth in
refractory sales as industry production levels rise.

Increased use of refractories in chemicals manufacturing, incinerators, and a
variety of other small volume markets will also help bolster overall product
sales. However, the manufacturing methods utilized in key end use industries
will continue to become more efficient, refractory technologies will improve
further, and demand for longer lasting, higher end refractories will climb.
This will lead to reduced intensity of usage and limit global market advances.

Global iron & steel market to dominate refractory sales

The iron and steel market will continue to dominate refractory sales
worldwide, accounting for almost three-fifths of all 2016 product demand in
volume terms. Gains will come primarily from a pickup in global steel output.
The market for refractories used in nonferrous metals production will climb at
about the same pace for similar reasons.

China to account for 72% of volume gains worldwide

Refractory sales will expand most quickly in developing areas, reflecting an
ongoing shift in metals and other heavy industry production to countries with
low cost structures. The Asia/Pacific region, in particular, will post the
largest tonnage increases, followed by the Africa/Mideast region, Central and
South America, and Eastern Europe. China alone will account for 72 percent of
all refractory volume gains between 2011 and 2016, due both to additional
growth in its huge steel, cement, and other heavy manufacturing industries,
and the use of less sophisticated production methods in steelmaking and other
important markets than those used in economically advanced nations.

The volume of refractories consumed will also rise in the US, Western Europe,
and Japan following an extended period of decline, as economic conditions grow
stronger in these areas and output of ferrous metals and other
refractory-using products rebounds. Output gains in these areas are more
likely to result in higher refractory demand because the manufacturing
techniques utilized are already so efficient that it will be much more
difficult to reduce refractory consumption on a per unit output basis than in
less developed countries. Due to their greater use of more costly, high
quality products, the US, Western Europe, and Japan will account for a
somewhat larger share of the world refractory market total in dollar terms (19
percent in 2016) than they will in tonnage (14 percent).